The initiative comes as a response to the Palestinians' demand for a "right of return" to the Land of Israel.

The initiative, which is expected to further obstruct the already deadlocked negotiations, was drafted by members of Jewish-American organization JJAC.

After discussing the initiative, Ayalon and National Security Council Chief Uzi Arad decided to hand the matter over to the Foreign Ministry's legal department.

According to the initial outline of the plan, Israelis hailing from Arab countries will be eligible to demand financial compensation for the property they left behind.

JJAC also suggested establishing funds that would help protect Jewish cemeteries, restore synagogues and return Torah scrolls to Arab countries, in addition to giving out research scholarships.

The initiative was launched several days after the publication of Ayalon's article titled "I am a refugee," in which he wrote, "As a descendant of a family forced out of Algeria, my father and I – and the millions of other Jews from families who were expelled from Arab countries after 1948 – are entitled to redress."

The article, which was published in newspapers across the globe, was also distributed in foreign embassies in Israel and consulates around the world.

"The issue of Jewish refugees from Arab lands has not been dealt with – not on the public level, or on the political and judicial level," Ayalon claimed.

"We must remember that more than 850,000 Israelis came from Arab lands without any property, and therefore they are considered refugees. It is definitely an issue that must be raised during our negotiations on a permanent agreement," he said.

Ayalon also noted that "Israel
has absorbed some 900,000 Jews who have assimilated into society, while Arab countries left their refugees to live in subhuman conditions."